Fuel economy standards have become a surprising example of
tougher government rules that benefit practically everybody. In
2007, the Bush administration raised the gas mileage requirements
automakers had to meet.

Then in 2009, the Obama administration raised them further. Those
rules, which are about to be finalized in detail, will require
each automaker's fleet to average a lofty 54.5 miles per gallon
by 2025—roughly double the mileage requirement of just five years
ago.

The aggressive new standards are controversial, especially among
Republicans opposed to activist government. GOP presidential
contender Mitt Romney, for one, characterizes the new
rules as just another effort to "insert the federal government
into the life of the private sector." He has suggested that if
elected, he'll roll back or even seek to eliminate federal
mileage standards.

Yet so far, the new mileage rules have generated tangible
benefits for consumers, with few of the downsides opponents have
predicted. "Without a doubt, the new rules have been a win-win
for everybody," says Jesse Toprak, of the car-research site
TrueCar.com. "It's a win for consumers, a win for manufacturers,
and a win for the environment."

Automakers have been rolling out new technology and other
innovations that boost mileage, such as advanced powertrains and
transmissions, lighter components, and even fix-a-flat canisters
in lieu of a traditional jack and spare tire, to save weight.
Since 2007, the average fuel economy of cars purchased has risen
from 20.1 miles per gallon to 23.6 mpg, according to the
University of Michigan's Transportation Research Institute.

The mileage of some popular vehicles has improved by more. A 2013
Nissan Altima with a standard four-cylinder engine averages 31
mpg, for example, up from 26 mpg in 2007. That's a 19 percent
improvement. The most powerful Ford Explorer went from 16 mpg in 2007 to 20
mpg today, a 25 percent gain. The biggest efficiency gains
typically occur when automakers retool a model—which typically
happens every five years or so—and outfit it with the latest
technology. So more big mileage gains will be coming as more
models turn over.

Boosting fuel economy by four or five miles per gallon might not
sound earth-shattering—until you bank the savings. A 5 mpg
improvement would save about $525 per year for a motorist who
drives 15,000 miles annually, if gas were at $3.50 per gallon.
With gas at $4 per gallon, the savings would amount to $600 per
year.

Some car enthusiasts have argued that the new mileage rules would
force automakers to depower cars and build blasé econoboxes
reminiscent of the 1970s, when soaring oil prices led to the
first government fuel-economy requirements. Back then, automakers
built some truly dreadful cars in order to comply with the rules,
such as the Dodge Omni and the Ford Mustang II, an emasculated
version of the iconic muscle car.

But they're not making that mistake again. Instead, automakers
have found ways to coax more power out of smaller engines, so
drivers don't have to give up performance or other amenities
they've gotten used to. The four-cylinder engine on the new
Altima, for example, generates 182 horsepower, compared to 175
horsepower on the lower-mileage engine it's replacing. Ford now
offers a V-6 "ecoboost" engine on its F-150 pickup truck that
generates more horsepower and torque than a V-8 that's
available—with slightly better mileage.

The new technology that's behind such efficiency gains does cost
extra money, fueling another concern about the tougher mileage
rules: They'll force car buyers to pay more out of pocket,
whether they want higher mileage or not. And car prices have in
fact gone up over the last couple of years. TrueCar says the
average price paid for a new set of wheels has risen from about
$27,300 in January 2010 to $30,400 today—close to a record high.

But other factors besides high-mileage technology seem to be
pushing prices up. In general, car buyers have been shifting to
smaller vehicles, as a cushion against gas price spikes that now
seem to occur every year or two. But buyers have also been
selecting more features, ranging from leather upholstery to
navigation systems to rear-view cameras. So they're buying
smaller cars with more options. Low interest rates have also
allowed many buyers to load up on features while still ending up
with a lower monthly payment than they had on their last car.

This is good news for automakers, because they're able to make
better profits on small cars that typically have razor-thin
margins. In fact, for years, the Detroit automakers lost money on
most of their small cars, which they built mainly to push up
their fleetwide mileage ratings. As a money-losing venture,
however, small cars got little of the attention or resources that
profitable trucks and SUVs got. That turned into a huge liability
when gas prices soared in 2008 and buyers began clamoring for
high-mileage vehicles. General Motors, Ford, and Chrysler had few
compelling models, and their sales plummeted, while the Japanese
and European carmakers did better.

The new mileage rules could still end up costing buyers money, as
the targets get tougher and automakers end up with little choice
but to push customers into expensive high-mileage technology. But
the cost of fancy new systems usually falls as more people buy
them. Meanwhile, automakers are doing everything else they can to
become more efficient and cut costs, lest rising prices cut into
business. Somehow it seems like car buyers will continue to
benefit.

Rick Newman is the author of Rebounders: How
Winners Pivot From Setback To Success. Follow him on
Twitter: @rickjnewman.